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February 16, 2011

Curiouser and Curiouser

The rift that has arisen between the U.S. Patent and Trademark Office and the Justice Department over the question of patent-eligibility for isolated genes seems to be continuing. Last Thursday, the Acting Solicitor General sent a letter to the Federal Circuit, requesting to opportunity to present oral argument to the Court in support of the Justice Department's amicus curiae brief in Association of Molecular Pathology v. U.S. Patent and Trademark Office (aka the Myriad case). This brief has already exposed deep divisions between the two Cabinet departments (Justice and Commerce), with the patent solicitor evidently being completely excluded from any participation in preparing the "government's" brief. Now, the specter is raised of one part of the Executive Branch arguing to the Court that the considered judgment and almost three-decade history of practice of another department of that same government has been (and continues to be) wrong in granting patents not only on isolated human genes but also on any isolated biological (or "natural") product.

The letter, from ASG Neal Katyal (at left), informs the Court that he intends to argue the "government's" position himself, and that the parties will not oppose his motion to participate. He asks the Court to accommodate his schedule, by calendaring the argument on April 4th, to permit him to participate in oral argument before the Supreme Court (on global warming) and before the 4th Circuit (on the Affordable Care Act). Despite this busy schedule, the ASG asks the Court to grant his motion to personally participate in the Myriad argument, indicating how important the administration evidently believes this issue to be.

This scenario of one part of the Executive branch arguing against another smacks of a "gang-that-couldn't-shoot-straight" administration, and if the consequences were not so significant it might pass for political theater to the enjoyment of President Obama's political opponents but without great effect on the national polity. But the "government's" position, that natural products cannot be patent-eligible, has real-world and deleterious consequences far beyond the limited scope of patent eligibility for isolated human genes (the overwhelming majority of which will be outside the reach of patent protection in a little less than ten years). The very property the government's brief argues makes isolated genomic DNA patent-ineligible -- that it is a "product of nature" -- applies with even greater force for all other valuable and useful "products of nature" including almost all biologic drugs. There is typically substantially less modification involved in isolating these compounds, which are in fact merely isolated (separated from other impurities) rather than chemically changed (by breaking covalent bonds that hold the DNA molecule together). Simply put, the government's position would prevent patent protection (and thus retard commercialization) of any useful compound found in plants, microorganisms, animals, etc. This rationale also applies to products of genetic engineering, because while methods, cells for producing biologic drugs, and other components of the chain of production may be patentable, the drug itself will be less patentable the more closely it mimics the "natural product." Since differences between synthetically produced biologic drugs and the compounds as they exist in nature carry the risks of differences in stability, in vivo half-life, biological activity, and immunogenicity, the "government's" position that ASG Kaytal is so anxious to argue disincentives biologic drug production, by putting drugs that are closest in stability, in vivo half-life, biological activity, and immunogenicity to the "natural product" in the most jeopardy of failing to be eligible for patent protection. Estimates (even the "government's" estimates from the Federal Trade Commission) of the investment costs for bringing a biological drug to market are in the $1 billion range. It is unlikely that such an investment will be made in the uncertain environment that would result from the Court adopting the "government's" views on patent eligibility for such "natural products."

Looking on the bright side, the possibility exists that, under the kind of piercing questioning that ASG Kaytal is likely to face from whatever Federal Circuit panel hears this argument, he will begin to have a glimmer of an understanding on how completely the "government" has botched the opportunity to benefit from the experience of senior PTO officials and experienced legal staff, and that merely being the latest installment of the "best and brightest" isn't always enough. In instances such as these, involving questions having such real-world consequences, operating from "first principles" and attempting to impose a political solution that satisfies as many of your supporters' constituencies as possible is almost certain to involve unexpected and unintended consequences. Regardless of whether ASG Kaytal experiences his own personal epiphany on these matters, it is also possible that the Supreme Court will come to appreciate the deficiencies in the "government's" arguments, and that this will make it less likely to grant certiorari on the question of patent eligibility for isolated genes should the Federal Circuit reverse the District Court on the merits. That would be an outcome deserving of the political theater the ASG's day before the Federal Circuit is certain to become.

Patent Docs thanks Hal Wegner for alerting us to and providing a copy of ASG Kaytal's letter.

Comments

[Redacted] there's plenty in Kaytal's bio (http://www.law.georgetown.edu/faculty/facinfo/tab_faculty.cfm?Status=FullTime&ID=272) to show [redacted], but nothing there that indicates even an iota of understanding patent law or the way the world works - he's been in government service and academia for his whole career. Seems to me he may as well have written to the CAFC, "I'm so important, and this case is so trivial in comparison to the other cases that I need to try soon, that you really ought to schedule this case for my convenience. Because, after all, you're just the Federal Circuit, not a real appellate court, let alone the Supreme Court where I usually hang out, and any idiot can understand the issues here. So please don't waste any more of my time than necessary." I hope the clerk schedules this one for Friday, AND the judges grill him before vacating the lower decision for lack of standing.

[This comment has been redacted to comply with Patent Docs policy of discouraging ad hominem attacks.]

I'm not nearly as gung-ho on how Myriad has used its exclusive rights to build a $350 million/year US monopoly on having identified mutations in BRCA1 couple months before others, and at the same time as others found BRCA2. I frankly suspect they have poisoned the well for subsequent innovators in DNA diagnostics because their moribund two-gene testing model casts a shadow over more robust full-genome technological options (see Mary-Claire King's PNAS paper from last year on massively parallel sequencing of 20-some genes that predispose to breast and ovarian cancer).

I truly hope the CAFC does not duck the substance by deciding on standing, since we really need some case law here.

The knee-jerk defense of gene patents that fails to distinguish therapeutic products from diagnostic services is doing real damage to future business models that will depend on full-genome analysis. Instead I hope this case gets remanded with instructions that DNA is patent-eligible, but then Judge Sweet can probe patentability of the 15 contested claims on novelty, enablement, and written description. In the bright light of day, the broadest of those claims are likely to fail, some on novelty and some on section 112, freeing up some badly needed space to innovate on more enlightened business models than Myriad's. But there would also be clear indications that patents are part of the story--that they should be granted and will be upheld so long as they correspond to disclosure. Myriad would lose its US monopoly but retain some rights that drive royalties. This would force Myriad to compete on quality, speed, and other grounds on which they are likely to do just fine, thank you, since they run a very efficient testing service. But with much stronger incentives to test other genes and adopt the newest sequencing technologies.

I have no clue about the internal politics among SG, DoJ, USPTO, etc. But this case is important to get right, and the more people thinking about it the better, so long as they do their homework.

As an aside, the Myriad call with investors a couple weeks ago is worth noting. One hopes Myriad will enter Europe with a less litigious opening foray than their US entry in 1998. Peter Meldrum's sabre-rattling about lawsuits in Europe notwithstanding, it would be suicidal to sue Euro labs, lest every country do what France and Belgium have already done and pass compulsory licensing laws explicitly intended to thwart Myriad's US business model. And imagine trying to win a suit in France, Germany or UK when they've already lost at the district court level in the much friendlier US federal court system.

How quaint, the left hand (DOJ) of the cabinent disagreeing with the right hand (Commerce). I agree with the first commentor that Kaytal needs to "get a life." And I agree with your perceptive insight that the DOJ's position has nothing in common with reality or the law. I really do hope the panel of the Federal Circuit that hears this case sharpens their knives for this character. This case would be a "comedy of errors" but for the fact that the issue here is truly important and that a ruling in favor of the DOJ's position would be disastrous for biotech and pharma in general.

One more thing. Having now read Kaytal's bio (provided by courtesy of the first poster), I don't see anything in it that would suggest any comprehension of IP law, much less patent law. He may find his experience at oral argument before the Federal Circuit more than he bargained for.

The government was a party in the lawsuit, and was only dismissed as a party when the district court refused to reach the Constitutional issues. So arguably the government may be a party again if the case is remanded, and so there is some basis for hearing what the government has to say.

In addition, if the PTO Solicitor had filed an amicus brief this would not be an issue; that the DOJ has done so, and seemingly contrary to the position the PTO has taken for a generation, is what is troubling.

As you know, I agree that the “real” issue here is the patent-eligibility of diagnostic method claims generally; the Myriad claims are just a subset, where the diagnosis is based on genotype. But it is well to recall that it is PubPat and the ACLU who defined the grounds upon which this fight is being fought – because “no one should own YOUR genes” has a bigger emotional kick and looks better in solicitations for contributions.

And the topic here is the continued, avid involvement of a cadre of attorneys at the DOJ who have applied a nonsensical distinction between “natural” and “man-made” products in trying to reap political gain from the situation. I have no doubt that these folks believe that they have “solved” the “natural products” question, but the consequences are disquieting at a minimum.

As for personalized medicine and whole genome analysis, the gene claims are irrelevant – each one requires isolation of an intact nucleic acid encoding the functional gene product, and this isn’t how these assays are performed. You have demonstrated in your work that many oligonucleotide probe claims may be invalid, due to the unexpected non-randomness of genetic information – even the “junk DNA” kind.

So the real issue is to what extent diagnostic method claims may inhibit medical diagnostics. That question has a little “chicken v. egg” quality to it, since it is just as likely that defining these relationships will take a lot longer than anyone expects as it is that patents will inhibit their development. As while the need for genetic patent pools, or dedicating SNP information to the public after patenting, or an ASCAP/BMI arrangement for these methods may be necessary, these are issues that don’t necessitate broad prohibitions on subject matter eligibility as a solution. Because the consequence would be to create incentives for non-disclosure, something I think is much worse than the (relatively) short period in which such patents could retard progress.

As for Myriad, their revenue is a measure of how successful they have been in providing a diagnosis to women in time for prophylactic measures to be taken. What is lost in this debate is that Myriad took the risk to establish this company, and to develop the assays that have never produced a real false-positive (where a woman had drastic surgical procedures that turned out to be unnecessary). As much as academic clinical labs profess that they could do the job just as well, I might be cautious in believing them – academics tend to believe they can do anything. I remember the flood of failed biotech businesses started by molecular biologists in the 1980’s, all of whom believed that they would be successful because they were so much smarter than mere businessmen. I agree that Myriad does not need patents now – but they did when they started the business, like all startups in the biotech space, and we are kidding ourselves if we forget that. This isn’t to say that Myriad is not the poster child for bad business behavior, but perhaps that is less the result of their actions or behavioral failings and more the result of being the first genetic diagnostic company to be so successful, in an area that can be made so emotional, and at a time when academic clinicians became aware of and at least minimally capable of performing such testing.

Finally, I disagree about the importance of the standing issue. I think in many ways it is the most important issue, since it would affect all patents not just those relating to the biotech industry. It would be chaos if someone could sue Microsoft under a 1st Amendment free speech argument, based on patents to word processing software. While I am intentionally exaggerating, affirming the plaintiffs’ standing to sue in the Myriad case would make it possible for any person, regardless of any actions by the patentee, to sue any patent holder. This can’t be right, and would perhaps destroy the value of patents (think about the effects that all the false marking suits are having if they were expanded to all patents).

Perhaps. And maybe the President isn't paying as much attention as he should. It is a little incongruous that the major talking point from the SOTU address is innovation and inventing ourselves out of this recession and competing in the global marketplace, from an administration working to harm one aspect of our economy - startup biotech companies - that has the potential (and the track record to support it) to fulfill the President's vision.

Let's hope decision makers start listening less to brilliant scientists like Francis Collins and more to individuals who actually know how innovation is achieved and nurtured.

I wouldn't get too worked up about this. Sweet was wrong about patent-eligibility of DNAs. He wasn't wrong about mere correlations between mutations and traits, however. But it doesn't matter, as I have strong doubts the CAFC will even reach the substantive issues. This is why Prometheus v . Mayo is so critical. I think the deadline for the certiorari petition is coming up. LET'S GO MAY-O! LET's GO MAY-O!

As we have discussed, I think the Supreme Court is going to let the CAFC decide Classen and Myriad before it takes up this issue again. The Court gave strong hints that it wanted the CAFC to develop some additional jurisprudence, in part because the Court seemed to feel that (outside the business method context) it could use the crucible of litigation to distill the issues in a way that it could more properly decide them.

"Now, the specter is raised of one part of the Executive Branch arguing to the Court that the considered judgment and almost three-decade history of practice of another department of that same government has been (and continues to be) wrong in granting patents not only on isolated human genes but also on any isolated biological (or "natural") product."

So it is a specter when one branch of the executive gets something right and the other is off in nowhere'sland picking its own and the industry's noses?

I'm not sure that is a specter. Or even a spectre.

It sounds to me like there is one branch of the government which has no interest in the matter and is unbiased, and the other happened to have dropped a ball for a couple of decades and wants to save face now that people are coming out to call them on it.

Not really. You guys could simply cry to congress for your own protections. It isn't like it is impossible for them to give it to you or for you to whine your way into getting it.

"Looking on the bright side, the possibility exists that, under the kind of piercing questioning that ASG Kaytal is likely to face from whatever Federal Circuit panel hears this argument, he will begin to have a glimmer of an understanding on how completely the "government" has botched the opportunity to benefit from the experience of senior PTO officials and experienced legal staff, and that merely being the last installment of the "best and brightest" isn't always enough. "

O, you mean those same people you bash, or slight when it suits your nefarious ends? Indeed, they totally botched the opportunity to learn from their great wisdom, vaunted as they are.

Come on Kev, you could at least act like you have a bit of integrity. Play pretend if you have to.

"In addition, if the PTO Solicitor had filed an amicus brief this would not be an issue; that the DOJ has done so, and seemingly contrary to the position the PTO has taken for a generation, is what is troubling."

I think you meant "invigorating".

"And the topic here is the continued, avid involvement of a cadre of attorneys at the DOJ who have applied a nonsensical distinction between “natural” and “man-made” products in trying to reap political gain from the situation."

Doing the "right thing" tends to do that Kev.

"This can’t be right, and would perhaps destroy the value of patents (think about the effects that all the false marking suits are having if they were expanded to all patents)."

Sounds "right" to me, even if that were the situation at hand, even though you know full well that it isn't. Patentees are sitting there constantly saying, every single day, "we want to exclude people from making this." Even if they never go to court and back it up, that's still what is going on.

"What is lost in this debate is that Myriad took the risk to establish this company, and to develop the assays that have never produced a real false-positive (where a woman had drastic surgical procedures that turned out to be unnecessary)."

And what a huge risk that was. Oh wait. Maybe not. They just discovered and patented the basis for what was expected to be a huge breakthrough in diagnostics. Yeah. Huge risk right there.

I fully intend to be present at this political theatre.

Also, nice pic you got there Kev.

""I'm so important, and this case is so trivial in comparison to the other cases that I need to try soon, that you really ought to schedule this case for my convenience. Because, after all, you're just the Federal Circuit, not a real appellate court, let alone the Supreme Court where I usually hang out, and any idiot can understand the issues here. So please don't waste any more of my time than necessary.""

And more power to him. Because he'd be exactly right.

"I truly hope the CAFC does not duck the substance by deciding on standing, since we really need some case law here. "

I hope they do, and then I hope the USSC comes in and says nope, has standing, oh, and also, on that issue you ducked, the DC was right.

And then everyone goes "lulz" and goes home. Then the sky does not in fact fall the next day, or the next day, or the day after that...

Bob's completely right in that not all gene patents are created equal, and Myriad's insistence on preserving a monopoly from which they've already made billions (long ago recouping their costs -- which had been largely funded through public funds anyway -- and any "risks" associated with their business model). Moreover, the administration's approach is quite moderate since POTUS could fix this quickly with and executive order. Unlike some past administration's, this one is content to let the courts sort it out.

Perhaps you have been out of this country for too long. "POTUS" quickly fixing this with an executive order would be quickly challenged on Constitutional grounds. Congress (not the president) writes the law. The President cannot rewrite any law he so desires by merely issuing executive orders.

Certainly, the president's executive powers are limited, and his orders subject to being overturned by law, but he has the power, more and more frequently executed of late, to direct the actions of cabinet level departments of the sort that Kevin points out are currently taking contrary positions. So, he could issue an order expressing the executive's definitive position. As GWB did with withholding federal funding for stem cell research on all but a few lines of stem cells, Obama could try to ban the patenting of any gene sequence discovered with the help of federal funds. My point is, as with all of his policies, he is being more cautious and diplomatic than he could be, and for that matter, than I'd like him to be in this situation.

And Skeptical, if you mean to say that the president "ought" not to be able to simply enact law by excutive order, then I sympathize. Yet the past 60 years have seen wars started, public schools integrated, the armed forces integrated, whole avenues of research funding cut off, and other major policy changes executed first with the stroke of a president's pen. Thus, any angst over the president's warring administrative branches could similarly be resolved. Nonetheless, letting the courts sort it out is better, and a moderate approach compared with recent history.

Gee whiz, tongue-in-cheek I *called* it an ad hominem attack and you posted it in toto, then over the weekend you lost your sense of humor and redacted it. While still keeping 6's drivel intact! I'm hurt.

Your comment presented a tough call and we decided to err on the side of caution. By the way, the comment was redacted shortly after it was published (and not over the weekend). Also, 6 holds the record (by far) for redaction on this site, so you have a ways to go to catch him.

Your point was neither "perfectly rational", nor backed by evidence. It was only argument that derailed from my point. You are free (or allowed) to post whatever you want (to the level the good doctors here permit), but I hope that you don't mind if I protect the meaning of my comments and deride trailers that I consider inappropriate to what I was saying.

You were insinuating that due to my residence abroad, I did not understand the nature of executive orders. I do, and gave both explanation and specific instances. My point was that the administration's approach is moderate, considering the option of an executive order. What is irrational about that point? How does my reliance upon the history of executive orders being used in the past 60 years to make significant policy "tarnish" your post? How is what I was stating in any way "needless propaganda" having "no place" on this blog?

I am mystified.

I come here because it's the one of the only patent blogs left that tolerates honest debate with some civility. I expect your kind of comments at Quinn's site, but not here.

The tarnish is that you ignore the basic point to launch into one of your non-patent diatribes.

And I expect your kind of offshoot political stands at Patently-O. Let's agree to leave this site free and clear of such needless propaganda - and yes, "wars started, public schools integrated, the armed forces integrated" have abasolutely nothing to do with patents and IS propaganda. There is nothing honest about your claiming otherwise. If my brusqueness offends you, I apologize. Your propaganda offends me, and you offer no such apology in return, but rather seek to validate your non-patent excursion.

Perhaps you would be more clear if you were less wrong. My examples were instances of executive orders explicitly overturning (i guess that you meant to say that instead of "overright") laws, and then becoming the law of the land. As for discussing patents, that is specifically what I was discussing. Nothing about my statements on this thread has been "offbeat" --again, I assume that's how you intended to characterize my statements, since "offshoot" doesn't make any sense in this context. I am neither offended by your brusqueness nor by your characterizations, which are peculiar, but not at all hurtful. I just wanted to be sure the point I was making was generally clear. I believe it is, and that your opposition is to me, not to my point. So with that, good day.

My opposition is to the fact that you drag political concerns unrelated to patents into a patent blog. You then have the audacity to proclaim that you are somehow mystified when I correctly (yes, correctly) tell you that the President does not create law by edict.

The specific point being your suggestion that the the President, by edict, "Moreover, the administration's approach is quite moderate since POTUS could fix this quickly with and executive order". You are simply wrong on this point.

Your slipping into pedantics to try to cover your tracks is exactly what I have seen you do at Gene Quinn's website. You are called on the carpet there just as you are called out here. The good doctors here try to maintain a blog on patents - leave the rest of your political propaganda out. Even this secondary level discussion of what I said versus what you think I said distracts from the patent discussion and I will say no further than this post.

Again, you claim "As for discussing patents, that is specifically what I was discussing. Nothing about my statements on this thread has been "offbeat" ." This is intellectually dishonest as I have already shown how you have expanded the discussion. You are unapologetic and continue to deny that your conversation is in any way inappropriate. I do oppose you when you delve into such tactics.

I do oppose your point, because it is wrong. The US is not a dictatorship where the President makes law by edict.

I am am skeptical as they come, and never purposely make statements without evidence. I gave you evidence of how the president can, and has, directed the actions of federal agencies to great effect, through executive orders. There are no tracks to cover, nor is it pedantic to provide cases demonstrating precisely what I claimed. It's just how argument ought to be made. Claims must be backed by evidence. Sure, there is plenty of reason to argue that the executive ought not to be able to do things this way, and in the past people have argued that executive orders like those I cited were over-reaching, but they have been done, are being done, and will be done, to great effect. Examples of the breadth and scope of such orders include policies much more compelling than the current gene patent debate, and as I've mentioned, executive orders were directly responsible for desegregating the armed forces (Truman), desegregating schools (Eisenhower), defunding abortion (Reagan), defunding stem cell research (GW Bush) and starting wars (Clinton). In fact, Obama could well direct Commerce to abide by DoJ's position on gene patents via executive order. I am not suggesting that Obama should do this, nor have I anywhere in this thread suggested such a thing. All I said was he could, as other presidents have done in other situations, but chose a more moderate path which ought to be given some credit. The courts will work it out, as they should.